By VIVIANNA ONORATO
The value of cryptocurrency known as bitcoin has dropped 16 percent, down to $9,600 from the record $11,434 that it had reached on Wednesday.
While not universally accepted, the digital currency is used online due to its entirely-digital nature. Serving as an alternative currency, it is usually considered an attractive to conventional currency, due largely to its financial independence from governments.
However, the digital currency is usually traded like a financial investment; in fact, at its peak, Bitcoin had increased substantially from the $1,000 value it had when the year started.
It’s worth noting that Bitcoin is “prone to wild swings” due to lack of regulations, as well as the lack of traders. Financial analyst Neil Wilson described trading in recent times as a “rollercoaster like nothing I’ve ever seen” and he equated it with small investors that lacked market experience with the coin.
Because they have no way of discerning the coin’s fair value, as well as the perception that the coin is not a currency, bitcoin has been perceived to be going through a bubble similar to the dotcom crisis.
Financial analysts have warned that bitcoin is not an official currency and should not be treated as such. It is simply a commodity with people choosing to invest and trade it whenever they feel like it.
This has led to some scrutiny by financial entities, whom warn investors about the inherent risks with the coin, whom have warned investors that they might lose their entire savings if they are not careful.